Securities Law & Instruments

Headnote

 

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – application for relief whereas distributions of Notes issued by the Filer and offered for sale in Canada and the United States are exempt from the prospectus requirement under the Legislation – requested relief granted.

 

Applicable Legislative Provisions

 

Securities Act, R.S.O. 1990, c. S.5, as am., s. 74(1).

 

TRANSLATION

 

November 25, 2016

 

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUÉBEC AND ONTARIO

(the “Jurisdictions”)

 

AND

 

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

 

AND

 

IN THE MATTER OF

BELL CANADA

(the “Filer”)

 

DECISION

 

Background

 

The securities regulatory authority or regulator (the “Decision Maker”) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the “Legislation”), in respect of certain negotiable promissory notes or commercial paper maturing not more than one year from the date of issue (“Notes”), that distributions of Notes issued by the Filer and offered for sale in Canada are exempt from the prospectus requirement under the Legislation (the “Multiple-Jurisdiction Relief”).

 

The Autorité des marchés financiers has received an application from the Filer for a decision under section 263 of the Securities Act (Québec) (the Act) that distributions of Notes issued by the Filer and offered for sale in the United States are exempt from section 11 of the Act (the “Québec-Only Relief”).

 

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

 

(a)           the Autorité des marchés financiers is the principal regulator for this application;

 

(b)           the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102”) is intended to be relied upon in respect of the Multiple-Jurisdiction Relief in each of British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and

 

(c)           this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

 

Interpretation

 

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.


Representations

 

This decision is based on the following facts represented by the Filer:

 

1.             The Filer is a corporation governed by the Canada Business Corporations Act with its head and registered office located in Montreal, Québec.

 

2.             The Filer is a reporting issuer in each of the provinces of Canada and is not in default of its obligations as a reporting issuer under the securities legislation of any of the jurisdictions in which it is a reporting issuer.

 

3.             The Filer is a wholly-owned subsidiary of BCE Inc. (“BCE”), a reporting issuer in each of the provinces of Canada that is not in default of its obligations as a reporting issuer under the securities legislation of any of the jurisdictions in which it is a reporting issuer.

 

4.             The common shares of BCE are listed on the Toronto Stock Exchange and the New York Stock Exchange.

 

5.             The Filer has implemented a commercial paper program that involves the sale, from time to time, of Notes issued by the Filer to purchasers located in Canada and to purchasers located in the United States.

 

6.             The offering and sale of Notes issued by the Filer are subject to the prospectus requirement under the Legislation.

 

7.             Prior to August 8, 2016, the Notes had a designated rating of “R-1 (low)” from DBRS Limited (“DBRS”) and “A-1 (low) (Canada national scale)” from Standard & Poor’s Ratings Services (Canada), both of which satisfied the rating categories prescribed in the exemption (the “CP Exemption”) from the prospectus requirement under paragraphs 2.35(1)(b) and (c) of National Instrument 45-106 Prospectus Exemptions (“NI 45-106”). The Notes also have a designated rating of P-2 from Moody’s Canada Inc.

 

8.             Accordingly, prior to August 8, 2016, the Notes were offered and sold pursuant to, and in accordance with, the CP Exemption.

 

9.             On August 8, 2016, DBRS issued a news release indicating, among other things, that it had downgraded the Notes by one ratings notch to “R-2 (high)” (the “Downgrade”) with stable trends, following the announcement by BCE of acquisition transactions.

 

10.          As a result of the Downgrade, the Filer is no longer able to rely on the CP Exemption for the distribution of Notes.

 

11.          All Notes will have a maturity not exceeding 365 days from the date of issuance, and will be sold in denominations of not less than $250,000.

 

12.          The Notes are unconditionally guaranteed as to payment of principal and interest by BCE.

 

13.          The Notes will be offered and sold in Canada only:

 

(a)           through investment dealers registered, or exempt from the requirement to register, under applicable securities legislation in Canada (“Canadian Dealers”); and

 

(b)           to persons or companies (“Canadian Qualified Purchasers”) that are “accredited investors” as defined in NI 45-106, other than those that are any of the following:

 

(i)            an individual referred to in any of paragraphs (j), (j.l), (k) and (1) of that definition;

 

(ii)           a person or company referred to in paragraph (t) of that definition in respect of which any owner of an interest, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, is an individual referred to in any of paragraphs (j), (j.l), (k) and (1);

 

(iii)          a trust referred to in paragraph (w) of that definition.

 

14.          The Notes will be offered and sold to purchasers in the United States pursuant to an exemption (the “US Commercial-Paper Exemption”) from the registration requirements under the 1933 Act and only:

 

(a)           through investment dealers registered, or exempt from the requirement to register, under applicable US securities laws (“US Dealers”); and

 

(b)           to persons or companies (“US Qualified Purchasers”) that are either:

 

(i)            institutions that are “accredited investors” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the 1933 Act; or

 

(ii)           “qualified institutional buyers” within the meaning of Rule 144A under the 1933 Act.

 

15.          The Filer will require each Canadian Dealer to follow procedures to ensure that sales of Notes by such Canadian Dealer, as well as any subsequent resales of previously-issued Notes by such Canadian Dealer, are made only to Canadian Qualified Purchasers.

 

16.          The Filer will require each US Dealer to follow procedures to ensure that sales of Notes by such US Dealer, as well as any subsequent resales of previously-issued Notes by such US Dealer, are made only to US Qualified Purchasers.

 

Decision

 

Each of the Decision Makers is satisfied that the decision concerning the Multiple-Jurisdiction Relief meets the test set out in the Legislation to make the decision.

 

The decision of the Decision Makers is that the Multiple-Jurisdiction Relief is granted in respect of the distribution of a Note, provided that:

 

(a)           the Note is not convertible or exchangeable into, or accompanied by a right to purchase, another security other than a Note;

 

(b)           the Note is not a “securitized product”, as defined in NI 45-106;

 

(c)           the Note is of a class of Notes that has a rating issued by a “designated rating organization” or a “DRO affiliate”, both as defined in NI 45-106, at or above one of the following rating categories:

 

Designated Rating Organization

Rating

DBRS

R-1 (low)

Fitch, Inc.

F1

Moody’s Canada Inc.

P-1

Standard & Poor’s Ratings Services (Canada)

A-1 (low) (Canada national scale)

 

and has no rating below:

 

Designated Rating Organization

Rating

DBRS

R-2 (high)

Fitch, Inc.

F2

Moody’s Canada Inc.

P-2

Standard & Poor’s Ratings Services (Canada)

A-1 (low) (Canada national scale)

 

 

(d)           the distribution is made:

 

(i)            to a purchaser that is purchasing as principal and is a Canadian Qualified Purchaser; and

 

(ii)           through a Canadian Dealer; and

 

(e)           each Canadian Dealer has agreed to follow the procedures referred to in paragraph 15 of this decision.

 

The decision of the principal regulator is that the Québec-Only Relief is granted in respect of the distribution of a Note, provided that:

 

(a)           the Note is not convertible or exchangeable into, or accompanied by a right to purchase, another security other than a Note;

 

(b)           the Note is not a “securitized product”, as defined in NI 45-106;

 

(c)           the distribution is made

 

(i)            in accordance with the US Commercial-Paper Exemption;

 

(ii)           through a US Dealer; and

 

(iii)          to a US Qualified Purchaser; and

 

(d)           each US Dealer has agreed to follow the procedures referred to in paragraph 16 of this decision.

“Lucie J. Roy”

Senior Director, Corporate Finance